My financial situation - please help

Paying for College
1

<p>My mom makes 20,000 a year, and my dad has been unemployed for the past year. We live in an apartment so have no real estate assets or any other types of assests for that matter. When this is run through the EFC calculator the EFC comes out to be 0. </p>

<p>One problem though. I recently found out I will be inheriting 50,000 from my Grandma. This will be placed in a account for me to use as I wish once I turn 18, which is in December, a month before I file for FAFSA. This would be an asset of mine and so I would be expected to contribute 1/3 of it per year (right?) The EFC calculator said I would be expected to pay 17,500 per 9 months.</p>

<p>I am wondering that since parents assets are assesed at only 5% if I could simply give them the money to place in a bank account, and hence have to contribute significantly less, $167 per 9 months. Also I see something about a asset protection for 42,000 so then the EFC would be 0.</p>

<p>Is this unrealistic? Could I get in trouble for doing this? Would it even work? Is there something else I could do? Im not trying to be dishonest here, I just would much rather save the money to use for grad school, or for a downpayment on a house etc. What more, 17,500 per nine months, times 4 equals 52,500, I have no way to come up with that 2,500 let alone all the other money I could be expected to contribute for dorms, books etc. If I could get my EFC to zero by giving the money to my parents I could use the 50,000 to cover those fees. </p>

<p>Im open to any ideas whatsoever, I know next to nothing about the way this all works.</p>

<p>Please help me as I am stressing about how I am going to pay for college, and what at first seemed to be a great thing, now seems like it could screw me over in the long run.</p>

<p>Thank you ever so much for any help and advice you can give me.</p>

2

<p>It sounds as if Grandma is deceased and this money is in a trust be available to you at your 18th b'day? You need to reveal a little bit more if you know. Are you sure the principal is totally available to you at 18?</p>

3

<p>Yes I am sure. And it will be a checking account, the attorney handling the case is doing it that way so that it will be quicker. Since I am so close to 18, when I would be able to get all of it from a trust he is just going to skip the trust and give it to me directly so I dont have to wait for the trust to get set up and then apply to get the money out etc. The money is from the estate, and the estate apparently has just been sold, and he is just waiting for the paperwork to all go through.</p>

<p>Bottom line, the money will be in a checking account and available at age 18. (December)</p>

4

<p>This lawyer knows your personal situation and your concerns about funding school? Perhaps you should consult your own financial consultant or lawyer who can help you out?? This is not a small sum of money. You need some advice and a plan. Are you parents capable/sophisticated enough financially to help you out? My first thought is buy a sports car....oops that is not what I should be telling you.</p>

5

<p>The lawyer is not my lawyer per say, he was hired by the manager of the estate, to be honest I don't think he cares to much about the situation. As far as getting my own lawyer or financial consultant I would love to but there is no way I could pay for it.</p>

<p>As far as my parents go, they can neither help me financially for college whatsover, or help me as far as advice goes for college or the inheritance. Neither my parents attended college, this is new for them as well. My mom lives paycheck to paycheck, has no retirement plan at all and needless to say is no expert when it comes to fiscal matters.</p>

<p>Hell, sports car. I wish.</p>

<p>Im pretty much relying on you guys for advice right now.</p>

6

<p>While what you are trying to do is not illegal, it is definitely not the most ethical thing you would be doing. </p>

<p>Remember even in the case of need based financial aid when you get scholarship/grant money from a college other people's parents are paying for your education (through their contributions to the college). </p>

<p>So what you are essentially saying that it is ok for other people to pay and none of the ownership for financing your education should lie with you or your parents.</p>

<p>
[quote]
What more, 17,500 per nine months, times 4 equals 52,500, I have no way to come up with that 2,500 let alone all the other money I could be expected to contribute for dorms, books etc.

[/quote]
</p>

<p>that is not exactly how it happens, What would happen is that you would exhaust the money.</p>

<p>You start out with 50,000 and 35% (17,500) becomes available for your education meaning you have a remaining balance of 32,500. </p>

<p>If the money remained untouched in a mattress, in year 2 it would be 32,500*.35 = 11,375 leaving a balance of 21,125</p>

<p>Year 3 21,175* .35 = 7,394 balance 13,781</p>

<p>Year 4 13,781 *.35 = $4,824 balance $8,927</p>

<p>Depending on where you go to school (especially if your choice is your local state U) you could probably end up being debt free upon graduation. Your grandmother would probably think she then gave you a great gift.</p>

<p>So now off my soap box...</p>

<p>You really should contact a financial advisor to tell you how to handle this because I am quite sure there are ways you can legally shelter this money.</p>

7

<p>Excellent advice, Sybie!
Matt; ask the lawyer to delay putting the funds under your name until January. That will buy you some time.
And, definitely hire a fee based financial advisor who specializes in college funding. It may costs $500 or so, but pay it out of your account, but could save you much much more.
If you need a name, email me and I'll send you the name of one I trust.
Good luck</p>

8

<p>Rskibum, let me expand on what you are saying. The ideal sequence would be January 1, file Fafsa and Profile without reporting inheritance, January 2, accept inheritance, January 3-December 31, spend inheritance on personal possessions (nonreportable), January 1 (year 2), file Fafsa and Profile for next year.</p>

<p>How to spend 50 large in a year on a nonreportable asset? And on something that a student will use and yet hold its value until after graduation? I like a variation on Hazmat's idea, a 5-7 year old top of the line Mercedes.</p>

9

<p>Since you cannot afford a lawyer and a financial personal for advice-Could you please inform us, how much their services would cost you?</p>

<p>If their services is more than upfront, $1.00, perhaps you are talking to the wrong people. </p>

<p>Suggest 1. You go talk to the executer of estate.
2. Search for an independent advice. Since you are so sure that you will be getting the $$, Spending a little money for advice can perhaps save you much grief.<br>
3. I can immediately think of a way to mask some of the money, ethically, legally, with very little risk (if any) and you can access the money later on. Any financial institution, money person or tax person will know what it is.</p>

<p>If I told you the answer now, you would stop looking. </p>

<p>When the question is about money, your health, and future- You may find that searching for a contrarian view will save you. Keep looking.</p>

<p>If you cannot find the answers in a week. Repost Q. for my answer.</p>

<p>PS: Buy, rent, borrow one of the books on financing college mentioned in CC></p>

10

<p>How about this? have your parent(s) contest the disbursement? the lawyer will be prevented from turning over the funds. At a later date, have them withdraw the contesting, and the funds will then be tirned over to you. Sounds like you've had a rought time of it. don't let anyone make you feel guilty .</p>

11

<p>
[quote]
If I could get my EFC to zero by giving the money to my parents I could use the 50,000 to cover those fees.

[/quote]
</p>

<p>I believe that you can only legally gift someone a max of, $10,000 without any tax implications</p>

12

<p>..although the amount is different now. You can only give someone - even a family member - $11,000 a year without paying a gift tax.</p>

<p>I agree with Sybbie's previous post as well. What you are saying is that you want to hold on to your inheritance for a future house or whatever, so other people should pay your tuition. While this is understandable, what if everyone did it?</p>

<p>Also, as for the suggestions that you send in the forms and then take the money the next day - nope. You are supposed to report changes to the financial aid office. People usually report losses (job loss etc) but a windfall certainly falls under the category of a substantial change that would affect your aid. NOT TO MENTION that it would be visible NEXT year on your forms, and would look like fraud!</p>

<p>This is important because it would free up money that could go to someone else with a real need for that $17,500 ---- someone who simply doesn't have it, not someone who wants to hang on to it.</p>

<p>I know it feels like your situation is totally unique, and unfair, but there are millions of stories just like it out there. There is ALWAYS some "good excuse" for hanging on to money, and everyone thinks his or her story is unique.</p>

<p>Bite the bullet and do the right thing.</p>

13

<p>Damn. I honestly do no know what to do. Would this really be that dishonest? I am quite low income, have no assets etc., Parents have never saved money for college or really cared about me going. I am a 'fair' candidate for financial aid. Except for the inheritance. </p>

<p>Despite what some of you are suggesting I do not want to spend it all on a sports car. I probally wouldnt use it for a downpayment on a house either. I want to use it to pay for my EFC after the financial aid I would get without the inheritance. Then do the same with it for grad school. True, I would like to spend a small amount of it on things I need, I don't have a car, it would be nice to buy a cheap 2000 dollar car. But the majority of money is going to be going into the colleges pockets, just not in four huge lump sums that are going to leave me broke and rather screwed. If there is suddenly a few thousand dollar cost somewhere for college there is not a snowball chance in hell I could pay for it, without the inheritance. Then where would I be? Dropped out of college and the college wasted there money anyways.</p>

<p>Maybe I am looking at this all wrong, I really don't know.</p>

<p>Moral implications aside, now for your suggestions. I dont believe I could contest the disbursement, I don't have any money to hire a lawyer to do this. Not to mention there really is no basis for them to do it on. Someone mentioned a financial consultant who would work for no money down? Is this customary, could I find one locally that will do this? I live in Michigan. </p>

<p>itstoomuch, I have read a number of books, as well as done far more than a few weeks of research, maybe I am blind but I can't find anything. Hint?</p>

<p>rskibum, could you possibly PM me that name? can he do anything over the phone, because I cant exactly travel to another state. At least I could call him and see if he can reccomend anyone locally for me.</p>

<p>nesdad, bullet? thats a fricken ballistic nuclear missile.</p>

<p>Im still very open guys, please continue with all the advice. I really need it.</p>

14

<p>"But the majority of money is going to be going into the colleges pockets, just not in four huge lump sums that are going to leave me broke and rather screwed."</p>

<p>You wouldn't be broke and screwed. </p>

<p>The inheritance would give you more college options than you'd have if you had 100% financial need. Many colleges do not give 100% of students' documented financial need. In fact, the colleges that do that tend to be places like HPYS, the most difficult colleges in the country to gain acceptance to.</p>

<p>Many colleges also calculate financial need into admissions decisions. At such colleges, the greater your need, the lesser are your chances of admissions.</p>

<p>There probably are legal ways of lessening how much of your inheritance you would have to use for your education. Other posters have pointed the way to your learning about those things.</p>

<p>In addition, you could choose to start at a community college and live at home. Depending on your state and location, the community colleges may be excellent and have virtually guaranteed admission to state universities, including your top university -- as long as you maintain good grades and take the proper academic courses.</p>

<p>You also could apply to public and private colleges that are likely to give you merit aid. To figure out which colleges these are, check the colleges' web pages for scholarship info. Typically, to get merit aid, one has to have stats in about the top 20% of the college's applicants, and/or one has to be a highly desireable candidate in other ways. </p>

<p>This could mean having skills or a vocational interest that the college needs, or being from an underrepresented geographic area, being from a nearby location (some colleges offer special merit aid for local students), being first gen college, etc.</p>

<p>Doing these things also would allow you to use some of your inheritance to help your family (Did they inherit anything? Is there any reason that you would not want to help them such as if they are totally irresponsible, addicted or have other problems?) as I've seen low income students do, none of whom had the benefit of an inheritance.</p>

<p>Indeed, I have seen low income students with heavy loans who were working their way through college and sending some of the $ home to help family.</p>

<p>You also can work summers and during the school year and you can consider taking a year off after h.s. and doing a program such as Americorps, which would give you some $ for college.</p>

<p>Probably most people do not end college with $ to buy a house. In fact, most students end college with about $20,000 in loans. Many students also don't have cars in college. What people do end up after college is an education that allows them to earn far more than they would have with a high school education. To check on the economic benefit of college, just do a Google search. There's plenty of info on this. </p>

<p>Depending on their field and grades, they also may end up making a lot of $ after college.</p>

<p>If your wish is to have the highest earning power possible right after college, you could consider entering a field such as engineering or business. With good grades, good internships during college, you could make $40,000 or more after college, which in many parts of the country would give you the $ to buy a house and other things.</p>

<p>One last thing: You are concerned about unexpected costs for colleges. It is unlikely that you suddenly would have to pay thousands of dollars extra for your college education. Check colleges' web sites. They provide estimates of the costs of college including the costs of books and other expenses.</p>

<p>Take a look at Berea College in Kentucky, which is only for low income students. It is a good college that has very low costs. Even with your inheritance, you may qualify for admission.</p>

<p>I can't emphasize more that you are in a wonderful position. That unexpected inheritance offers you options to improve your life far more than you'd probably be able to do without it. Spending that money on your education isn't getting screwed: It's expanding your options and earning ability.</p>

15

<p>Thankyou very much for the advice northstar. Neither my parents got an inheritance. The grandma is my moms dad, and rather then give the money to him, to waste, she gave it to me. My dad has been unemployed for over a year, and sporadic at best before that, needless to say helping him would not be high on my list of priorities. My mom on the other hand I would love to help, through the inheritance, thats one reason I would like to keep some of it. I do my best to help her right now by keeping a job and giving her most of the money I make, I dont mind whatsoever, she is a hard-working wonderful mom.</p>

<p>I dont want to go to a community college, or a low-incomeschool. Whatsoever. I am thinking of going to UofM, I have quite good stats and think I stand a good chance. 3.9 GPA, instate, and 30+ act score. What would my financial outlook be like if I want there?</p>

<p>Id love to answer more questions but I have to go to work, Ill answer more when I get back (5 oclock)</p>

<p>Thanks again and keep the advice coming everyone. I really appreciate it.</p>

16

<p>"I dont want to go to a community college, or a low-incomeschool. Whatsoever. I am thinking of going to UofM, I have quite good stats and think I stand a good chance. 3.9 GPA, instate, and 30+ act score. What would my financial outlook be like if I want there?</p>

<p>"</p>

<p>Check UM's merit scholarship site to see how you match with their criteria. My S's experience indicated that even though UM says that some scholarships don't take financial need into consideration, that's not the truth. S had checked on his app that he would apply for financial aid. UM sent him an application for a non need-based merit scholarship, saying in their letter that he was an excellent candidate for it.</p>

<p>Meanwhile, we'd decided not to apply for aid because (actually due to an inheritance), we figured he wouldn't qualify. I e-mailed Mich. asking whether S would still be considered for the scholarship, which was advertised on their site as being not based on need. They replied S would be considered.</p>

<p>S got no merit scholarships from Mich. When he called and asked why, he was told it was because he had no financial need.</p>

<p>Anyway, I think that you have an excellent chance of getting accepted to U Mich. However, I doubt that you'll get much aid. My advice would be to look first at other Michigan public universities that are likely to give you excellent merit aid. I am not familiar enough with your universities to tell you which ones, but simply check the colleges' web sites. Your stats are strong, and I think that there are some lesser ranked publics that would be willing to give you excellent aid. </p>

<p>Apply to UM -- because you never know what can happen. However, also apply to some financial safeties -- schools you'd enjoy going to and know you could comfortably afford.</p>

<p>Remember, even if you end up not going to Mich. for undergrad, you could go for grad school.</p>

<p>What majors are you considering? If you're considering majors like business, agriculture, journalism, engineering or nursing, many state universities have wonderful scholarships for students with a documented interest in those fields.</p>

<p>If you are willing to go to a liberal arts college, most are very interested in getting male applicants because the colleges attract far more women applicants than men. Some offer good merit aid, and highly qualified males like you would be first in line for such aid. Goucher College in Baltimore is one such colleges. Others here probably can tell you more. Use, too, CC's search function, using "merit scholarships" as your key words.</p>

<p>Will you be a National Merit scholar?</p>

<p>Curious: What do you have against going to a college that is for low-income students?</p>

17

<p>So, nedad (#12 above), is it your view if that if a student files the fafsa on January 1, and wins the lottery on January 2, there is a duty or obligation to report that to the financial aid office immediately? I understand that students are specifically required to report outside scholarships, but windfalls in general too? And I don't mean on next year's fafsa, but as a revision to the January 1 fafsa?</p>

18

<p>You are required to report any changes in your financial situation immeadiately (including winning the lottery on january 2, the first day of college or any other day). The college can make you repay all of the money they have given you fro financial aid, rescind your admission or expel you on the grounds of fraud.</p>

19

<p>In my experience you can arrange for a meeting, free of cost, with more than one professional.....a lawyer experienced in finance or an advisor in the field of financial planning. I do not know of a true professional who would not have a preliminary meeting with you to discuss you situation and find out if there was a true need for their expertise. Reputable professionals will see that you are young, have no other resources and want to better yourself, help your mother and get a plan. Also......are you willing to consider any schools in addition to U of Mich? I think there are many fine schools where you could get some merit aid. Now that you have some financial resources perhaps you could consider adding some names to your list. Travel to/from should not be a problem as you will have some funds and you may be intrigued if you and your mom visit a couple of schools or if you go alone. Keep an open mind. Contact a professional, with credentials, for your own information and protection. You sure are a lucky guy to have had such a nice gift from your family. Use it wisely. And.....you know the sports car is just a dream not what you need to do.</p>

20

<p>Matt: You haven't told us how much the financial or legal advice will cost you-assuming you have inquired. </p>

<p>hint answer: yellow pages.</p>